Court rules reappointment Rennie Maduro null and void (former GEBE C.O.O.)

POSTED: 07/21/15 7:15 PM

St. Maarten – Utilities Company Gebe won its lawsuit against its former Chief Operating Officer Rennie Maduro and by extension against the Council of Ministers (CoM) on Thursday. The Court in First Instance ruled that the CoM’s decision Ministers to extend Maduro’s contract by two years is null and void. It banned Maduro from taking management decisions for the company, barred his access to the Gebe-officers and authorized Gebe to de-register Maduro as a director of the company. Gebe does not have to pay Maduro any more salary.

The court ruling brings the rules for the appointment of directors at government-owned companies sharply into focus and sets a clear limit to the CoM’s authority.

On May 29, the CoM signed a decree to extend Maduro’s contract that formally ended on May 31, by two years. Two weeks before that date, on May 15, the supervisory board sent a letter to the CoM in which it withdrew its earlier advice (from February 26) to give Maduro a bonus and to extend his contract. The board added substantiated accusations of wrongdoing by Maduro to this letter. The CoM ignored it and extended Maduro’s contract anyway.

The court ruled, based on Gebe’s articles of incorporation that the meeting of the shareholder (the government) appoints directors based on a binding nomination from the supervisory board that contains at least the names of two candidates. The shareholder’s meeting has the authority to void the binding character of a nomination by a majority vote.

Based on the May 29 decree, the supervisory board had to submit a draft contract for ratification and approval to the shareholder. The decree notes, “That the board of supervisory directors and the board of managing directors of Gebe have been given the opportunity to cast an advisory vote on the decision.”

The court established that Vromi-Minister Marcel Gumbs had the authority to sign the decree, but it noted that – for lack of rules saying otherwise – the re-appointment of a director is subject to the same rules as appointments are based on a vacancy.

“A different conclusion would not be in line with the generally accepted and, in the case of Gebe, statutory established control- and advice authority of the supervisory board. It would sideline the supervisory board in the case of the reappointment of a director. The court assumes for now that the reappointment of Maduro required a binding nomination from the supervisory board.”

The court concludes in its ruling that the shareholder could not derive from statements by the supervisory board that it had nominated Maduro for reappointment. This conclusion is based on the May 15 letter from the supervisory board to the shareholder that stated, “We urgently inform you that after our advice to you and our decision to extend the agreement, we have discovered that Mr. Maduro has been committing serious misconduct in executing his duties of COO and president of the company. The misconduct committed by Mr. Maduro is of such serious nature that, had we been aware of this before, we would certainly not have considered advising the shareholder to extend the present agreement.” The letter gives four examples of misconduct.

In a follow-up letter dated May 26, the supervisory board substantiated the allegations against Maduro and repeated its position that he should not be reappointed.

The court rejected Maduro’s argument that the shareholder has the authority to void the binding character of a nomination, because when the CoM took its decision to extend the contract by two years, there was no such nomination.

The court ruled that the decree is void because the decision violates Gebe’s articles of incorporation. It rejected Maduro’s claim that Gebe continue to pay his salary

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